Projo’s Economic Enthusiasm

Yesterday’s Providence Journal was gung-ho about Rhode Island’s economy. The articles provide some data points to consider, but the eagerness with which Paul Edward Parker moves from factoid to conclusion makes the cynic in me wonder how much behind-the-scenes communication he had with the governor’s many public relations employees:

In the fourth quarter, the Rhode Island’s economy grew 2.7 percent, the fastest growth of any New England state and in the top 20 nationally. That quarter, the state’s economy hit $60.7 billion on an annualized basis, the first time it has eclipsed $60 billion.

A side effect of the growing economy is that people and companies want to be here.

That, in turn, has prompted a bit of a building boom around the state, but especially in downtown Providence.

Consider the first paragraph. Yes, according to the initial data, Rhode Island had a good fourth quarter, last year. Still, looking at annualized growth, rather than multiplying a good quarter by four in order to imagine it continues like that for a year, the Ocean State was still in the bottom half for the country. And keep in mind that this is growth, which raises questions about the starting point.

This isn’t to talk down a positive number, but to suggest that going from that number to declarations that “people and companies want to be here” and are therefore creating “a bit of a building boom around the state” suggests more enthusiasm than analysis.

Consider, also, Parker’s related article listing 10 construction projects in Providence. One involves space for guaranteed clients at public institutions of higher education, one is the heavily subsidized (and much promoted) Wexford project, one is for Brown students, one is a government-subsidized apartment building, one is a government-funded pedestrian bridge, one is a hotel, and four are still in the planning stages for hotels, housing, and retail. Sure, there’s some positive stuff in there, but again, without inclusion of other considerations, such as the generally more-rapid growth of the national economy under President Donald Trump, the descriptions seem much more like promotion helpful to the governor than an objective review of the economy.

That makes it seem like a higher order version of “gaming the indexes.” For a while, Rhode Island government’s solution to our poor rankings on various indexes was to change some nominal rates in ways that improved our ranks but didn’t much affect the actual economy. Subsidizing building projects gets some cranes in the sky, but they may not be as indicative of robust growth as it seems.